India bans Price Waterhouse from auditing listed firms for two years

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SEBI has also ordered the disgorgement of over Rs 13 crore of wrongful gains from the auditing firm and its two erstwhile partners who worked on the IT company's accounts.

The Securities and Exchange Board of India (SEBI) - regulator of the country's capital markets - has found the worldwide auditing firm PricewaterhouseCoopers (PwC) guilty in the Satyam case and barred it from issuing audit certificates to any listed company in the country for two years, Business Today has reported.

The 108-page notification stated PwC was party to foul play, and did not comply with auditing standards.

According to Times of India, SEBI ruled that PWC and the audit firms in its network (PwC India) can not audit listed companies and intermediaries (such as brokers) for a period of two years.

However, SEBI noted that this order would not impact audit assignments relating to the financial year 2017-18 undertaken by the firms forming part of the PwC network.

Sebi said the order would come into force with immediate effect.

By passing a stringent order against one of Big Four auditors in the world, Sebi seems to have set a strong message that wrong practices and market abuse would not be tolerated in India, say experts.

"In this context, the long period during which the falsification of account books took place, without the same drawing the attention of PWCIL or other PW entities in India, points to a systemic problem in the audit processes carried out by the PW entities", said SEBI, reported the Economic Times. "We believe that the order is also not in line with the directions of the Hon'ble Bombay High Court order of 2010 and so we are confident of getting a stay before this order becomes effective", the firm said.

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In India, all audit functions within the group are conducted under the Price Waterhouse (PW) brand, with a network of local firms operating under the banner.

Matters related to Satyam were also looked into by U.S. regulators as PwC is also a listed company in the American market.

In its order, SEBI said while PwC's "loose-knit network arrangement" enabled partner firms to derive the advantage of its global brand value but did not lay down any supervisory mechanisms to check the quality of the performance of the firms.

The punishment is for PwC's failure to find out that outsourcing company Satyam Computer Services was indulging in a billion-dollar fraud which came to light in 2009.

Price Waterhouse today said there has been no intentional wrongdoing by its firms in the Satyam case and expressed confidence of getting a stay on the Sebi order.

According to SEBI, PWC showed a total disregard for stipulated auditing practice, indicating its complicity in the manipulation.

Out of this amount, over Rs13 crore was paid towards PW Bangalore for the audit of Satyam Computer Services as submitted by it, the regulator added.

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